45.105 Contractors’ property management system compliance
Source: FAR 45.105 on acquisition.gov
Contractors must maintain a compliant property management system for Government property or risk liability and loss of Government risk assumption if deficiencies are not corrected.
Overview
FAR 45.105 outlines the requirements for contractors to maintain a compliant property management system when handling Government property. It establishes the process for agency oversight, corrective actions, and potential consequences if deficiencies are not addressed. The regulation ensures that contractors safeguard Government property and comply with contractual obligations regarding property management.
Key Rules
- Agency Analysis of Contractor Systems
- Agencies must regularly analyze contractors’ property management systems, policies, and procedures as often as necessary per agency guidelines.
- Notification and Correction of Deficiencies
- If deficiencies are found, the property administrator must notify the contractor in writing, request a corrective action plan, and set a schedule for correction.
- Consequences for Non-Compliance
- If deficiencies are not corrected, the contracting officer may revoke the Government’s assumption of risk for property loss and/or exercise other contractual remedies.
- Remedies Notification
- Contractors must be notified in writing if the Government decides to apply remedies due to unresolved deficiencies.
- Relief or Liability for Property Loss
- The property administrator determines whether the contractor is relieved of responsibility for lost property or held liable, based on whether the Government assumes the risk.
Responsibilities
- Contracting Officers: Oversee compliance, issue notifications, and apply remedies if necessary.
- Contractors: Maintain a compliant property management system, respond to deficiency notifications, and implement corrective actions promptly.
- Agencies: Conduct regular analyses and ensure oversight of contractor property management.
Practical Implications
- This section exists to protect Government property and ensure accountability.
- Contractors must be proactive in maintaining compliant systems and responding to deficiencies.
- Failure to comply can result in significant liability and loss of Government risk assumption, impacting contract performance and financial exposure.
(a) The agency responsible for contract administration shall conduct an analysis of the contractor’s property management policies, procedures, practices, and systems. This analysis shall be accomplished as frequently as conditions warrant, in accordance with agency procedures.
(b) The property administrator shall notify the contractor in writing when the contractor's property management system does not comply with contractual requirements, shall request prompt correction of deficiencies, and shall request from the contractor a corrective action plan, including a schedule for correction of the deficiencies. If the contractor does not correct the deficiencies in accordance with the schedule, the contracting officer shall notify the contractor, in writing, that failure to take the required corrective action(s) may result in-
(1) Revocation of the Government’s assumption of risk for loss of Government property; and/or
(2) The exercise of other rights or remedies available to the contracting officer.
(c) If the contractor fails to take the required corrective action(s) in response to the notification provided by the contracting officer in accordance with paragraph (b) of this section, the contracting officer shall notify the contractor in writing of any Government decision to apply the remedies described in paragraphs (b)(1) and (b)(2) of this section.
(d) When the property administrator determines that a reported case of loss of Government property is a risk assumed by the Government, the property administrator shall notify the contractor in writing that it is granted relief of stewardship responsibility and liability in accordance with 52.245-1(f)(1)(vii). Where the property administrator determines that the risk of loss of Government property is not assumed by the Government, the property administrator shall request that the contracting officer hold the contractor responsible and liable.